Below you see a definition of yet another Wall Street financial instrument that the Maryland Assembly and Baltimore City Hall allows the public to be tied to and as we have seen since the 2008 crash-----every aspect of these financial instruments are filled with fraud. From using Credit Default Swaps to insure what they all know will be toxic investments and then allowing taxpayers to pay 100% on the dollar of insurance-----to LIBOR connected to all these deals----to REIT that pretends to sell property tax debt to shareholders who then are supposed to pay that property tax BUT DON'T REALLY.....below you see the coming fraud that will take out the public sector and of course Maryland is heavily leveraged with credit bond leverage. Whether Erhlich as a neo-con or O'Malley as a neo-liberal----the intent is to give corporations a way to escape paying taxes, to assure they will not lose any of their investment while the taxpayer ends up soaked with the losses from the financial agreement to what once was public property. This is why you see so many of these NON-RECOURSE debt deals by the State of Maryland and City of Baltimore for development on public land. Think of the private stakeholders partnered with the state and city in these credit bond deals to rebuild our public schools. The only collateral in these deals is the real estate the schools occupy and then the finished, mostly taxpayer-funded rebuilding of these schools. You notice these pols guilty of public malfeasance had these deals expedited and construction was immediate ----because they are racing with the timing of this coming bond market collapse. As it shows with an example of the FED using non-recourse debt issued to JPMorgan at the time they knew Bear Stearn was heading to bankruptcy as one of the worst in the subprime mortgage fraud----JPMorgan took control of Bear Stearns assets and the FED absorbed the losses. Well, the FED didn't because the Clinton neo-liberal Congress sent taxpayer money to the FED to cover the losses and JPMorgan received all the assets remaining of Bears Stearn for no cost. This was all the work of our former Treasury Secretary Geithner. He was taken from the New York FED to head of all our money----after committing this one fraud amongst many.

THIS WAS A FRAUD AGAINST THE AMERICAN PEOPLE NO DOUBT.

The point with Maryland and its use of these financial instruments---is that these pols know ahead of time that the taxpayer is going to get fleeced and they do it because they work for Wall Street profit and move taxpayer money to any format that does this. O'Malley was tapped to run for President because of his commitment to throwing Baltimore and then Maryland taxpayers and public sector employees under the bus for these Wall Street profits. We still haven't recovered the Wall Street fraud against the State of Maryland from the 2008 crash and these deals we see below will set the public up yet again for losses from financial instruments along with a large amount of public real estate....AND IT IS ALL PREMEDITATED.

If the debt is non-recourse-----the debtor is treated as having sold the property for the outstanding balance of debt (not just its fair market value). If the debt is non-recourse none of the gain is treated a COD income and thus prevents the debtor from receiving relief from one of the section 108 exclusions.

' For the "Non-recourse" loan, you do not have the same problem as the collateral used will stand on its own. If you cannot pay it back, the lender simply takes control of the collateral pledged. They will not have the option to take you to court for the unpaid balance'.

So, when a brand new school in a underserved community defaults in this crash-----the assessment will ignore fair market and pay the entire costs. WHO IS THE DEBTOR WITH THESE BALTIMORE CITY SCHOOL DEALS? THIS IS PUBLIC MALFEASANCE AND FRAUD AND WE WILL PURSUE THIS WHEN THE COLLAPSE COMES AND THEY TELL US OUR PUBLIC SCHOOLS ARE NOW OWNED BY THESE PRIVATE STAKEHOLDERS.

'Non-recourse debt is typically used to finance commercial real estate, shipping or other similar projects with high capital expenditures, long loan periods, and uncertain revenue streams. It is also commonly used for stock loans and other securities-collateralized lending structures. Since most commercial real estate is owned in a partnership structure (or similar tax pass-through), non-recourse borrowing gives the real estate owner the tax benefits of a tax-pass-through partnership structure (that is, loss pass-through and no double taxation), and simultaneously limits personal liability to the value of the investment.

A non-recourse debt of $30 billion was issued to JPMorgan Chase by the Federal Reserve in order to purchase Bear Stearns on March 16, 2008. The non-recourse loan was issued with Bear Stearns's less liquid assets as collateral, meaning that the Federal Reserve will absorb the loss should the value of those assets be below their collateralized value'.It states that the State is not responsible to repay these bonds----but collateral will be taken.It's just a give-away of public assets to pay-to-play politics.

The Maryland Economic Development Corporation

(MEDCO) functions under the provisions of Title 10, Subtitle 1 of the Economic Development Article of the Annotated Code of Maryland. The legislative purposes of MEDCO are to: relieve unemployment in the State; encourage the increase of business activity and commerce and a balanced economy in the State; help retain and attract business activity and commerce in the State; promote economic development; and promote the health, safety, right of gainful employment and welfare of residents of the State. The General Assembly intends that MEDCO operate and exercise its corporate powers in all areas of the State; exercise its corporate powers to assist governmental units and State and local economic development agencies to contribute to the expansion, modernization, and retention of existing enterprises in the State as well as attraction of new business to the State; cooperate with workforce investment boards, private industry councils, representatives of labor, and governmental units in maximizing new economic opportunities for residents of the State; and accomplish at least one of its legislative purposes and complement existing State marketing and financial assistance programs by owning projects, leasing projects to other persons, lending the proceeds of bonds to other persons to finance the cost of acquiring or improving projects.

MEDCO structures its financings on a non-recourse basis. The State of Maryland, any State agency and MEDCO are not responsible for the repayment of the bonds that are issued by MEDCO. The repayment of MEDCO bonds is limited to the revenues generated by the applicable project._________________________________________

'In the event of a default, the lender will simply take possession of the SPE. There is no need to foreclose on the real estate or other property, assign contracts, etc., saving the lender a great deal of trouble'.

﻿﻿﻿I focus on Baltimore City public school building in this credit bond dealing scam on the public---but the number of public projects tied to these deals is huge. As it says above----in case of default the property tied to the credit bond will simply transfer to the lender----or developer usually. It is deliberate that the State takes this non-recourse because it makes sure that these developers only get the property and not sue the state for more money. Consider----over $1 billion in State funding for these Baltimore City Schools plus dedicated state and city money. That taxpayer money is now being spent as quickly as possible on these selected schools and will no doubt be finished by the time of the bond market crash next year. So that developer, for the up-front cost of planning and design, will get a newly renovated public school with the property for next to nothing. You know what that developer partnership will want to do with those public schools because they have to earn money off of these investments----they will create private charters operating for profit. We want everyone to know that Maryland Assembly pols and Baltimore City Hall knew all of this was the plan before any of this moved forward-----as did the leadership of organizations created to push this forward.

All that had to be done to rebuild these schools was recover the billions lost to the Baltimore economy over a few years to fraud----recovery of funds already owed the city from the State of Maryland to the subprime mortgage loan settlement. Taxpayers in Baltimore paid property taxes ten times over that could have rebuilt those schools. No-----they had to tie them to a Wall Street financial instrument so public assets could end up in private hands. I personally tried to get the list of stakeholders in this school building process and the Mayor's Office, the Comptroller's Office and the State of Maryland so far has pretended a list does not exist.﻿﻿﻿﻿﻿Use non-recourse financing to spur development

April 8, 2013 at 8:00 AM Infrastructure is the backbone of any prosperous regional economy. Power, communication and transportation systems lay a necessary foundation for economic development, and when underdeveloped, can be a major brake on growth. As the Lehigh Valley continues to grow and recover, the strength and quantity of local infrastructure projects will be a key element in the region’s overall outlook. The most difficult hurdle most infrastructure projects must overcome is securing initial financing. One locally under-utilized financing structure that can be beneficial to all parties involved in a project – and act as an avenue to secure funding for some projects that otherwise might never have been built – is non-recourse project financing. Non-recourse project financing is a financing strategy that is ideally suited to certain infrastructure and industrial projects: in which the earnings of a project serve as the source of funds for repayment of a loan, the assets of the project itself serve as the collateral for the loan and the loan is not otherwise guaranteed by the developer. The basic structure of a non-recourse project financing is relatively simple. A developer will undertake the early stages of development – identifying a potential market, securing a site and doing preliminary environmental and permitting work. The developer will form a special purpose entity solely to undertake the particular project in question, which will hold the real estate, permits and all other assets relating to the project. The SPE will then usually enter into negotiations with a primary off-taker for the product or service generated by the project. The off-taker will be the entity which will be buying the ultimate output of the project, e.g. the local utility for a power project or the municipality for a water or sewage facility. STRONG OFF-TAKER IS CRUCIAL A strong off-taker is a key element in most non-recourse project financings, as it is the off-taker’s credit which is often the most important element of the lender’s credit analysis. Once the preliminary work is done, the developer will seek financing. Lenders often prefer early involvement in a project, as they can then have input on the off-take contract and any key supply contracts before they are signed. Once the off-take contract has been signed and a potential revenue stream is identified – or if no off-take contract exists, the lender is satisfied that a strong and quantifiable market exists for the project’s output – the lender or lending group will make a loan directly to the SPE, with no or limited guarantees and security coming from the developer parent company. The primary security will be a stock pledge over the SPE itself. In the event of a default, the lender will simply take possession of the SPE. There is no need to foreclose on the real estate or other property, assign contracts, etc., saving the lender a great deal of trouble. This is acceptable to the lender because a guaranteed revenue stream exists for the completed project. The lender would be able to sell the project or bring in a project manager to run it. The credit analysis the lender will perform depends on the strength of the project itself, and the credit-worthiness of the off-taker – who in any event is the ultimate source of the funds that will be used to repay the loan (not the developer). CREDIT SUPPORT Of course, no lender will be willing to finance the entirety of a project with no credit support from developers or third parties. A variety of means exists to provide lenders greater security and comfort that they will ultimately see a return on their investment. Equity contributions from developers are universal, and it is quite common to require developers to fund cost overages, or a certain percentage of cost overages, with additional equity. There is a number of creative ways to look to third parties for credit support, as well. Depending on the project, funding and guarantees may be available from a variety of government entities, the off-taker or construction entity willing to provide additional credit support. Or, some other third party with a current or future interest in the project may be willing to step in to provide credit support. While the interest rate on a non-recourse loan will be higher than the rate on a conventional full-recourse obligation, the off-balance sheet nature of the loan allows developers to avoid tying up all their capital in one project, and to largely mitigate the risks of a catastrophic project failure. It allows smaller developers to secure financing they otherwise would have been unable to obtain, and ultimately, it allows more projects to be built. Non-recourse project financing can be an important engine of economic growth, and it is one the Lehigh Valley has not yet fully harnessed. An opportunity exists for those who will take advantage of it. ﻿﻿

____________________________________________Below you see the enthusiasm portrayed by Developer Tom Bozzuto-----who in my personal opinion builds uninspiring buildings----for this Wall Street or as he states----Market-based techniques. No doubt Bozzuto is one of the stakeholders who will attain ownership of these public properties when the bond market crashes.

The problem for the citizens of Baltimore as I have shown is that all development is tied to decades of leverage, tied to global corporations that really bring no value to the city, and all of the city revenue is being directed to projects based on how it can maximize profits for a select few and not how all of this works well for the citizens that pay taxes.EDUCATION PRIVATIZATION SAY BALTIMORE COMMUNITY FOUNDATION!That no doubt comes from Tom Wilcox's past life of boarding schools and Harvard.

Rebuilding schools, rebuilding Baltimore

Thousands are choosing city life; if we build better schools, they will stay

February 04, 2013|By Tom Wilcox, Wes Moore and Tom Bozzuto

Over the last 10 years leaders from the private, public and nonprofit sectors have begun to transform Baltimore's approach to its future. Traditional public subsidies have given way to strategic investments and tough decisions, using market-based techniques to reform our schools, rebuild our population, and make our neighborhoods safe, clean, green and vibrant.Now, the General Assembly must do its part to strengthen the city's future by passing legislation to reshape how the city makes improvements to its public school buildings. The city's plan is straightforward and achievable: act aggressively now to build or rebuild our school buildings and give every child in the city a welcoming school environment that will help engage them in learning.It is a proposal that will help kids, create a stronger school system, bolster the city's prospects for growth and benefit the entire state.Legislators must be reminded that Baltimore has already taken many hard steps to improve its educational system. A "choice" system gives middle and high school students the opportunity to "vote with their feet," with dollars following those students to the best-performing schools. A union contract sets a national standard for holding teachers and principals accountable for their students' performance. And focused initiatives have increased the high school graduation rate and the number of preschoolers who are "ready for school." And schools that fail to meet increasingly rigorous standards are being closed.These steps and more show that our civic and private leaders are serious about creating great schools that will change the trajectory of inner-city youth while attracting the middle class families necessary to any city's success.﻿﻿Now, the focus is on providing a physical environment in Baltimore schools comparable to that in schools across Maryland. The legislative proposal to revamp the school system's capital process would lead to major and accelerated improvements in our school buildings, benefiting kids, teachers, staff and families.The school system has done its homework, commissioning a study that put a price tag on infrastructure needs in every school building in Baltimore, and it has developed a plan that would shutter buildings, cut or merge programs, and renovate or rebuild 136 buildings.The city schools bond financing plan to rebuild its inadequate infrastructure may be the best opportunity that Baltimore has had in a generation to cement its revitalization.﻿﻿Under the plan, an independent entity would be created to borrow significant funding through a bond issue to jump-start much-needed capital improvements, and use state and local funding to repay the bonds. It's important to note that the plan requires no extra money from the state, just a commitment to stand by current annual commitments. The timing is perfect. Interest rates are low; construction costs are manageable.This effort in the General Assembly must be viewed not simply as a bricks-and-mortar educational initiative. Rather, it is part of a comprehensive effort to push for major changes that can move Baltimore forward and restore the city's role as an economic engine for Maryland.The signs of momentum are apparent, whether it's ongoing downtown development, the bustling rental market driven by young professionals' interest in city life, or the emerging high-tech economy fueled by robust educational, medical and federal institutions. Across the city, private sector initiatives such as Healthy Neighborhoods Inc. are reestablishing "middle neighborhoods" that have wonderful assets but need a boost to continue to strengthen.The bottom line is that thousands are choosing city life. If we can improve the schools they will stay. These young people can, by themselves, fulfill Mayor Rawlings-Blake's modest goal of attracting or developing 10,000 new taxpaying citizens.The nonprofit Teach For America already pledged to fulfill 10 percent of the mayor's goal by helping their teachers engage in neighborhood leadership opportunities as they develop lasting ties with our city.Such commitments from the nonprofit sector must be met by similarly ambitious initiatives from the public sector that enhance city life and build a business-friendly environment.We have pressing goals: reducing crime, building a better transportation infrastructure that supports employment opportunities, and fostering an energetic business environment. But perhaps overriding them all is the need for a strong school system that will attract new families and new employers.There is more hard work ahead to capitalize on the educational progress already achieved, but we can take a major step forward right now by changing how we build our schools.A quarter century ago, state leaders overcame a host of issues to finance and build not one but two stadiums, leading to the winning seasons we now celebrate. Surely we can come together now to give our youth and our city and state the future they deserve.Tom Wilcox is President of the Baltimore Community Foundation. Wes Moore is a best-selling author and host on the OWN television network. Tom Bozzuto is Chairman and CEO of the Bozzuto Group. All are trustees of the Baltimore Community Foundation.

_____________________________________________As MEDCO states----it is a corporation built from Maryland Assembly legislation to control who gets what funds. Because of its quasi-governmental status the public finds it impossible to get access to who these private stakeholders are with these deals. We had a lawsuit over the State Center in Baltimore that O'Malley was desperate to tie to a credit bond deal before the coming bond market crash that happened only because one developer knew the details and was fighting another developer-----THE PUBLIC HAD NO ABILITY TO SEE WHAT WAS HAPPENING. These deals almost always end up as pay-to-play where connected corporations get the business as well as the stakeholders that end up with the real estate.

YOUR MARYLAND ASSEMBLY POLS DO THIS TO THE CITIZENS IN MARYLAND AND THEY ARE RE-ELECTED EVERY ELECTION. GET RID OF THEM! BILLIONS OF DOLLARS ARE LOST IN MARYLAND EACH YEAR TO THIS LEVEL OF FRAUD.

These are the people appointed to be the voice of development that taxpayers in Maryland do not have. See why the Governor and Mayor's Office must stay in the hands of a team-player! THIS IS WHY IT MUST CHANGE.

The Baltimore Development Corporation (BDC) and its predecessors have existed in some form since 1959. The Baltimore Development Corporation was formed in 1991 through the merger of three nonprofit organizations with different areas of service but similar economic development goals. In 1996, a private sector Board of Directors was appointed and BDC took on its current operational structure.